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By Mirna Sleiman
DUBAI, Nov 22 (Reuters) - Citadel Capital SAE has agreed with Qatari investors to import liquefied natural gas (LNG) into Egypt from mid-2013, the Egyptian private equity firm said on Thursday.
Egypt has two LNG terminals and a pipeline to export some of its large gas reserves, but it has been diverting some of the fuel intended for export to meet rapidly growing domestic demand after summer fuel shortages and power cuts.
“Egypt is in strong need of additional natural gas to feed the power generation sector and supply Egypt’s industrial base,” Citadel Capital Chairman Ahmed Heikal said in a statement.
Egyptian Prime Minister Hisham Kandil told reporters last month that Cairo was in talks to import LNG from Qatar, the world’s largest producer of super-cooled gas, and Algeria.
Citadel Capital said the joint venture, which will be 51 percent owned by Qatari investors and investment bank QInvest, would build and own facilities needed for a floating LNG storage and regasification unit (FSRU) to deliver natural gas to high-volume end-users in the north African country from the middle of next year.
According to the terms of the agreement, the joint venture will import LNG, warm it back into gaseous form on board the special ship and then pump it into the Egyptian national gas grid to help to meet demand from large users such as power stations.
FSRU’s are attractive to many new LNG importers because they are much cheaper and quicker to set up than permanent regasification facilities that can cost billions of dollars.
Because the special ships can be relocated during periods of lower demand, FSRU’s are increasingly popular solutions to soaring energy demand in countries where gas demand is highly seasonal.
Some countries in the Middle East are looking to develop them as a mid-term solution to soaring gas demand while they try to develop their own gas reserves.
The planned location of the FSRU facility, the source of the LNG and the project’s expected investment cost were not announced. But assuming that most of the LNG will come from Qatar, it could be located on the Red Sea coast of Egypt so that tankers do not have to navigate the Suez Canal.
Citadel did not disclose how much it is paying for its 49 percent stake in the venture, its second joint venture with Qatari investors this year after closing a $3.7 billion financing package for the Egyptian Refining Company project, in which Qatar Petroleum International is a key shareholder. (Additional reporting and editing by Daniel Fineren; Editing by David Goodman)